Looking ahead to the next year, the majority of CFOs have focused their upcoming investment strategies on three key areas: technology, sales and marketing.
That’s the gist of Grant Thornton’s new Q3 2024 CFO Survey, which garnered insight from more than 230 senior finance leaders.
Survey Reveals Hints of Uncertainty Behind Confidence
Despite the current economic and political challenges, many respondents shared a confident outlook for their organizations, with 79% reporting that they expect growth in net profits over the next 12 months – a 10-quarter high for the survey.
But behind that optimistic front, respondents also showed hints of uncertainty as confidence was down in other areas, as compared to the firm’s Q2 CFO Survey:
- 53% of CFOs said they are confident in their company’s ability to meet supply chain objectives (down 9%)
- 51% said they felt confident about their ability to meet goals for increased demand (a 12% drop)
- 49% expressed confidence in meeting labor needs (a 6% drop)
- 45% projected confidence regarding growth projections (down 11%), and
- 42% said they had confidence in meeting cost control goals (down 13%).
Importantly, timing may have affected the results of the survey, researchers acknowledged in a footnote. Specifically, Joe Biden had just dropped out of the presidential race days before the survey began. In the following two-week period, the S&P 500 dropped 384 points, and a jobs report showed that unemployment had risen .2% from the previous month.
So we have to take these numbers with a grain of salt.
Despite the lower numbers, Paul Melville, national managing principal of CFO Advisory for Grant Thornton Advisors LLC, said CFOs are confident.
“Finance leaders’ belief in their ability to drive profits at their organizations remains unshaken, even as their confidence in other key fundamentals tumbled in an unsettled environment,” Melville said. “CFOs believe they can push the right buttons to help their organizations thrive in the long term.”
CFOs Share Top 3 Investment Strategies
To help position their companies for success in 2025, CFOs have been taking a close look at their investment strategies. Here’s what they are focusing on, according to the survey.
Investing in Technology
It’s probably not surprising that senior finance leaders are planning to invest in technology. Let’s face it, as far as investment strategies go, this sounds like a solid move. After all, artificial intelligence (AI) has the potential to revolutionize how we work.
But what might raise a few eyebrows is just how many CFOs said that tech upgrades are their top investment strategies right now. A whopping 66% of respondents said they expect to increase their spending on IT and technology in the next year. That’s a 15-quarter high in the survey.
“These investments have become table stakes,” Melville said. “CFOs understand that they need these technological capabilities to be competitive.”
After experimenting with AI on behind-the-scenes business tasks earlier this year, more companies are now using generative AI in customer-facing roles. How so?
Respondents said they are using generative AI for:
- customer relationship management/customer experience (60%, up from 45% in Q1), and
- product/service development (58%, up from 35% in Q1).
“In the era of GenAI investment, management teams will spend resources on the use cases they believe create a competitive advantage in the market,” said Mike Notarangelo, Partner and Private Equity Audit Leader for Grant Thornton. “Boards of directors need to develop an agile AI governance framework to evaluate those investments and safeguard against AI-related business risks.”
Investing in Sales and Marketing
CFOs understand that sales and marketing go hand in hand. When the two departments are strategically aligned, companies are more likely to turn prospects into new customers – and then convert those new customers into long-term clients.
That’s why many finance pros have prioritized sales and marketing as a pair in their investment strategies. In fact, more than half (56%) of respondents said they expect their sales and marketing expenses to increase next year.
“This is how you gain market share,” Melville said. “CFOs are recognizing the need to have differentiation in their products and services, and they’re investing more in sales and marketing for those products as a proactive move to drive more growth and capture market spend.”
Will the Election Change Their Investment Strategies?
Most CFOs are paying close attention to the upcoming election on Nov. 5. Whether they’re examining the candidates’ economic ideas or their tax plans, many senior finance pros are contemplating how the election results might impact business.
When specifically asked whether the election results might change their investment strategies, respondents gave varied answers:
- 31% said they are accelerating some investment strategies in anticipation of the election
- 23% are holding off on some investments until after the election, and
- 46% said the election won’t affect any investment plans.
In Melville’s view, finance pros would be wise to set aside election concerns while they’re hashing out their business plans and investment strategies.
“You’re still going to invest in AI to drive improvements through technology,” Melville said. “You’re still going to make sure your cybersecurity protections are strong. The business fundamentals like efficiency in the finance function and the basics for growing your business aren’t going to change regardless of who is in the White House or the government.”